Service not included.

The Queen on the application of Mr Peter Gaskin v LB Richmond Upon Thames (2018) EWHC 1996 (Admin)

We didn’t report round 1 of this, probably because it was so completely inconclusive, but here is round 2 and a decision that will very significant for every Local Authority landlord/letting licensing scheme.

The issue was the upfront level of fees charged by LB Richmond on Thames for an HMO licence. LB Richmond maintained that the fee level could be set at a level designed to cover not only the costs of processing his application but also to contribute towards the costs of LB Richmond running its HMO licensing scheme more generally, including enforcement. Mr G, the landlord, maintained that the fee could only be set at a level covering the costs of processing the application.

Mr G was prosecuted for failing to pay the licence fee demanded and that resulted in a judicial review. The first part of the JR – dealing with domestic law – is here. Mr G mostly lost. But it resulted in an adjournment on the issue of whether there was a breach of EU law to a later hearing. This was that adjourned hearing.

The issue was whether private letting of accommodation was a service for the purposes of EU Directive 2006/123/EC. If it was, then the licence fee would be restricted to just the apportioned costs of processing the application, not the broader costs of the operation and enforcement of the licensing scheme.

The High Court found that the letting of private accommodation was provision of a service that would fall under the Directive. It was not relevant that council tax rather than business rates were paid on the property. The express exclusion of social housing from the directive indicated that other housing provision was included.

LB Richmond’s upfront licence fee was therefore unlawful

Comment

There will no doubt be an appeal. No doubt at all. This does severe damage to the fee planning and setting of many, many councils’ licensing schemes and effectively means that the upfront licensing fees cannot assist in paying for enforcement costs.

This is not to say that an appeal will be successful, just that it is inevitable.

 

 

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, Housing law - All, Private Tenancies, Regulation and planning and tagged , , , , .

16 Comments

  1. Pingback: Tessa Shepperson Newsround #62

  2. It seems to me that the only thing Richmond did wrong was to charge the fee for administration and enforcement up front at the application stage.

    In Hemming (the 2017 judgment), at Para 9, Lord Mance said, “The scheme which the council operated was only defective in so far as it required payment up front at the time of the application. Its invalidity was limited. Contrary to the respondents’ case, European law permits a fee to cover the costs of running and enforcing the licensing scheme becoming due upon the grant of a licence.”

    However, Hemming was remitted to the Administrative Court to determine what level of fees Westminster could demand – with reference to the fact that their scheme had generated substantial profits over a number of years – which would seem to suggest it wasn’t just covering costs.

    • How many authorities have a two stage charge? None that I know of. The admin and enforcement element was not calculated separately here – the explanation at the previous hearing was:

      The figure of 50 hours, explained in greater detail in the Council’s answer to the FOI request, is the average total number of staff hours per HMO licence required over the 5 year period for which each licence runs, comprising 19.1 hours of an assistant’s time, 26 hours of an Environmental Health Officer’s time, 3½ hours of a manager’s time and 2 hours of a systems administrator’s. At the relevant rates of pay the cost of these amounts to £1125.66. A further £200.40 per licence is incurred on non-staffing costs. The resultant total for the year 2015/16 was £1326.06.

    • Further point. Housing Act 2004 allows for councils to charge ‘a fee’ – singular. So couldn’t be two stage. Could conceivably be one initial fee where the enforcement/operation element is refunded to people who applied but weren’t granted a licence. This is hardly ideal and hard to calculate.

    • In Hemming [2017] UKSC 50, the question referred to the ECJ was whether authorities could charge an application fee and then refund the administration/enforcement part if the application was unsuccessful. The ECJ said they could not.

      From Hemming (at 2), the sex shop licensing legislation talks about “a reasonable fee” for applicants. However, the Supreme Court found (at 7) that in EU and domestic law, it was okay to split the fee and charge a part of it on application and a part of it on success. Admittedly the wording of s63 Housing Act 2004 is slightly different because it talks about a requirement for “the application to be accompanied by a fee”. But as we are talking about an issue of EU law, it would seem sensible to apply a purposive interpretation, and allow the fee splitting that authorities are allowed in sex shop licensing.

    • It might, but it isn’t that straightforward. Where is the statutory power to demand a fee at any other stage apart from application?

  3. FOUR figure alleged cost by L.A’s are absolute Tosh ! How can a Landlord licensing scheme in Wales be operated for £144 per Landlord ( Not per PROPERTY, or Even more ridiculously, per occupant ) be justified, -wage or other costs cannot make up this difference. !

    Lets call it as it is – a money making revenue replacement for Central government funding, authorised and legislated for by them in lieu of their financial default.

    Its not even that Licensing is needed with the availability of Civil Penalties, which responsibly used, can actually refund enforcement work.

    • The challenge to the cost failed (and also note the basis on which the costs was worked out, over 5 years, and that that was not what was charged).

      The charge doesn’t make money (or if it does, it has to be held against the costs of the scheme).

      Civil penalties are only available where there has been a criminal offence – so failure to comply with enforcement notice, for instance. There are still the costs of investigating, serving notice and establishing breach.

  4. Will there be an appeal? You would think that the Local Authority would weigh up the costs of the appeal against the potential loss of income. Where are the funds for the appeal coming from? Council Tax? Council Tax is for the provision of services to the CT payers, this appeal would only seek to line the pockets of the Council at a cost to the CT payers. When was the last time any court in this country ruled against an EU Directive? Richmond may well have bitten off far more than they can chew and in doing so opened the floodgates to claims against every other LA in the country for unlawful charges in their licensing schemes………..very well done Mr Gaskin I applaud you.

    • Oh they won’t lose income, or at least not in the longer term. It is perfectly possible to have a two stage charge – with the first charge covering the costs of administering the licence application process only, then a second charge for those granted a licence covering the rest of the costs of managing and enforcing the scheme. That will, of course put the fees up for those granted a licence, as there will be further admin costs for the second charge and fewer people paying the management and enforcement costs.

      To that extent, this was a wholly pointless challenge – all the substantive challenges to how Richmond calculated the fees were dismissed at the first hearing.

      Any appeal wouldn’t be against the directive, but on the issue of whether a landlord is providing a service under the meaning of the directive.

  5. Civil Penalties ,.. for Criminal offences ? – no, for certain offences under the Housing Act, failing to comply with Improvement Notice ( after all, – isn’t that the aim – IMPROVEMENT, rather than time-consuming and lengthy prosecution, with funds from penalties going back to fund enforcement ( unlike court fines )
    ( lets stop calling any aspect of housing that is identified as requiring improvement, – Criminal )

    Yes if a Civil penalty is challenged before the First Tier Tribunal, the L.A will have to prove the Housing offence breach – but still a quicker and cheaper option.

    • Chris – I said civil penalties only available where there has been a criminal offence. That is correct. I didn’t say for *any* criminal offence.

      I agree that the civil penalties ought to be a better way of dealing with breaches (failure to licence, breach of HMO management regulations, failure to comply with an Improvement Notice, Prohibition Order etc etc.) because the funds go entirely to the council. I’m all for them. Councils seem reluctant to stump up the initial funds needed though.

      And this was the mandatory HMO licensing scheme…

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